The House narrowly passed the Senate’s fiscal year (FY) 2018 budget resolution today in a move that formally paves the way for Congress to pass tax reform legislation through the reconciliation process, allowing legislation to pass with only 50 votes in the Senate, as the Vice President could act as the tie breaker if the votes are evenly split. The budget resolution also allows the federal government to increase its debt by $1.5 trillion over the next ten years in order to lower tax rates.
Last month, Administration and Congressional Republican leadership released a “Unified Framework for Fixing Our Broken Tax Code,” which seeks to lower the top corporate tax rate to 20 percent and eliminate “numerous” corporate tax expenditures in order to help achieve the lower rate. The Housing Credit is one of only two corporate tax expenditures that the framework explicitly proposed to retain. The framework is silent on the tax-exemption for multifamily Housing Bonds, which provide critical financing to nearly half of all Housing Credit projects, although it is our understanding from various reports that the authors of the framework have a general agreement to fully retain the tax-exemption on municipal bonds, which include Housing Bonds.
House Ways and Means Committee Chairman Rep. Kevin Brady (R-TX) is expected to release the text of the Committee’s tax reform legislation on November 1, with the goal of holding a markup the week of November 6th and a full vote in the House the week of November 13th. The Senate is expected to follow closely behind the House, with a potential markup in the Senate Finance Committee the week of November 13th. The White House has also set an aggressive timeline by signaling its desire to have President Trump sign a tax reform bill into law before the year's end.
The tax reform process will move quickly over the come weeks, so now is a critical time for all Housing Credit stakeholders to reach out to Congress in support of the Housing Credit and Housing Bonds. Last week the ACTION Campaign sent a letter to Congress and the Administration signed by over 2,150 organizations and businesses, urging them to retain the Housing Credit and Housing Bonds, enact the Affordable Housing Credit Improvement Act, and make any other adjustments needed to ensure that the Housing Credit is not negatively impacted by a lower corporate rate or other changes in tax reform. Visit our Advocacy Toolkit for more resources to advocate for preserving, strengthening and expanding the Housing Credit and Housing Bonds in tax reform.